Testimony before the Taxation Committee on LD 898, An Act To Reduce Student Loan Debt through an Expansion of the Educational Opportunity Tax Credit.
Our state and our country is facing a crisis. The next bubble to pop, is student loans. After graduating and entering the workforce, many college graduates pay a large portion of their income on student loan payments. According to the U.S. Department of Education, the average college graduate incurs more than $29,000 in student loan debt. And that’s a low amount compared to many out there.
This bill will not wave a magic wand over the issue. Much of what needs to be done, should happen at the Federal level, however we can take action in some areas. This bill makes a really small change that could have a major impact on students in our state.
Imagine for a minute you are a graduating senior from a Maine high school. You are contemplating where to attend college. So many great options, most of them not cheap. Come to find out, the program you always wanted, the major of your dreams, isn’t offered at a public institution here in the state. Not the end of the world, so you apply to a school that does offer it in one of our neighboring New England states. Come to find out, you get a reduction in the costs to attend through the Regional Student Program tuition break through the New England Board of Higher Education. Makes the tuition cost between in-state and out-of-state tuition. Fast forward to graduation. Your peers who are graduating from a Maine institution can apply for an income tax credit if they get a job in the state. But you however, even you are lucky enough to get a job here, isn't eligible for the same state income tax credit because you went out of state.
You see I was that student. I wanted to major in broadcast journalism to become a reporter. I tried desperately to try and find a program at the Maine school to stay here, but I couldn't. Moreover, I couldn't afford the named-brand schools with large price tags in more metropolitan areas. I settled on Lyndon State College in Vermont, where they not only had my program, I got the NEBHE tuition break to help reduce my costs. I made the choice to come back to Maine because I wanted to, but I received nothing for doing so while so many of the kids I graduated with from high school were eligible for this tax credit.
We are currently incentivizing students to leave Maine, but are not providing the same incentive as their peers to come back to the state to apply their skills and new found knowledge. For a state that desperately needs a youthful, well educated, and skilled workforce, it seems counterproductive to our state’s interests by continuing the status quo. We are actually doing ourselves a major disservice and losing talented young minds to other states. You can take a major step towards stopping the bleeding. Stopping the brain drain. Pass this bill.
The Maine Educational Opportunity Tax Credit, also known as Opportunity Maine, offers reimbursement to college graduates for student loan payments. Under the current rules, the graduate must have completed an associate or bachelor’s degree in Maine and must work in the state afterwards at the Maine employer or be self-employed through a small business. According to Maine Revenue Services, in 2012, this credit was given to 1,157 students. Students can qualify for over $4,000 in total income tax credits. Not a lot, but enough to make a real difference for people. You will see in the attached brochure the breakdown of the program, application requirements, and monthly benchmark payments.
This is a fantastic program that should be expanded to reach more students who by no fault of their own, are trying to better themselves, and come to Maine and make a difference in our local economy. Many students who study elsewhere in New England want to return to Maine. By expanding this tax credit to them, we can ensure that more students return to our state to live and work. This bill would expand the program to students who are pursuing or have pursued a course of study available only at a public institution outside of Maine as part of the New England regional student program. This tuition break, offered by the New England Board of Higher Education, enables thousands of New England residents to enroll at out-of-state New England public colleges and universities at a discount as demonstrated with my own story that is not unlike so many others. Attached you will see the kinds of programs that aren’t offered here that would qualify in New England and for this program. The number of Maine students using the NEBHE tuition break program was estimated at 557 between 2012-2013. Those are the students we are talking about being eligible for the tax credit. We can’t estimate how many new students, who previously did not qualify, will take advantage of the credit, but that’s a minor yet significant number of students who we would be helping.
Due to the fluctuation of students taking advantage of the program, the fiscal note is hard to define. Last session a similar introduced by Rep. Cathy Nadeau was estimated to cost estimated $90,000+ the first year and around $137,000 the second year of the expanded program. While I would argue there are existing funds within the Opportunity Maine program that aren’t being used due to low participation that could be used to handle the increase in students eligible for the program. Last session this bill passed unanimously by this committee, and in both chambers. It failed, however, to get funded by the Appropriations Committee. It is my hope that this time around, we make this a priority. Students are in need of this help and our state needs them. Our state has a high rate of student loan debt that cripples young people’s ability to start their lives and keeps many from attending college. We need to do everything we can to help young Mainers fund the foundation for their futures.